Cutting corners

With the oil prices escalating and forecasts pointing that there is a possibility of hitting $200 a barrel around 2009 to 2010, obvious costs will follow suit with the oil price increase like food, electricity and of course gasoline. As is the current trend, gasoline prices are increasing by P1.50 to P2.00 per weekend every weekend! Electricity may have just become cheaper as NAPOCOR has just decreased its rates by 0.036cents per kilowatt-hour, but this definitely won't hold for long as Napocor will soon feel the pinch of the increasing cost of production. Food costs are also on the uptrend, as seen in the rise in the price of rice.

And what can we ordinary folks do?

Make sure your emergency fund is getting fat. Past readers can possibly see that the emergency fund is really an important thing to have, as I have been repeatingly been advocating this topic. In the environment of inflation shooting up every month, we have to be prepared for price spikes especially in the prices of our daily necessities. This emergency fund can cushion the impact on your wallet when spending for these necessities, so we won't feel the pain of basic commodity price increases while we wait for the correction of our salary rates, hehe!

Get rid of stuff you don't need and earn for it I just sold my car (pictured above), since I haven't been using it ever since I started working in Makati. It was just left in the garage - a useless asset that doesn't help me earn, since it doesn't take to me work anymore, hehe. As I view it, you have to be smart about using your car nowadays, to save on gas and to save on repair and maintenance, because this will just drain your funds from much needed resources. Also, do a quick round around you living space and pick out things that you have no more value for, then hold a garage sale.

Cut corners

I reviewed my budget and looked at the places/ expenses that I can cut corners, and I saw our household phone and internet bill that I pay for (around 3k a month). Looking at our past usage of the internet, it would be ok to downgrade our DSL line, and so that's what I did. By next month, I'm expecting to save at least P1k from the downgrade. Give your budget and your expenses a review and check where you can cut the spending, and focus on saving for the hard times ahead.

Spend to save Sometimes you have to spend more dough upfront to cash in the savings in the coming years. The government just launched the SWITCH movement that advocates the use Compact Fluorescent Lamp (CFL bulbs) in place of incandescent bulbs program. CFL's are usually more expensive that those regular incandescent bulbs, but the savings you get from its electricity consumption and its lifespan makes it cheaper in the long run. Another example of spending to save is bulk buying. The underlying concept here is that you can usually get the item's price per piece at a cheaper price when you buy by bulk versus buying the item individually. Another advantage of bulk buying is that you freeze the price of that particular item for the duration of the stock of that particular item with you, thereby helping you escape the effects of inflation.

Get with the program The substitution effect is already making waves in the grocery stores. I suggest you join the club. Look for cheaper substitutes for the items you usually purchase to get more bang for your buck.

Do you feel the increase in prices already? Have you done anything to increase your cash on hand (to decrease your monthly expenses)? Share them in the comments! Thanks!

Pay yourself first

What is your most reliable earning asset? The answer is "yourself"

Here are some definitions (and some tips) I've come across based on the adage of 'paying yourself first'.

1. Savings - Every time you receive your paycheck or when your salary gets credited, pay yourself first before spending your hard earned cash. Set aside an amount you are comfortable with (which should be more or less proportionate to the importance you place on ensuring a future for yourself, hehe) and keep this untouched. You can assign this savings fund to be your emergency fund and move on to other investments when you've reached your emergency fund goal.
2. Investing on yourself - I doubt anyone wants to get stuck earning the same amount every payday for the rest of their lives -- make yourself more valuable to the workforce by paying yourself, or in other words by investing in your most reliable earning asset, which is yourself. Set aside or build a fund that will support your endeavors in increasing your market value, whether it be going back to school, buying a good book, learning a new skill or making sure you stay in healthy shape, etc.
3. Rewarding - Every hardworking asset needs a breather and/ or a pat on the back once and a while, for motivation to work or something to look forward to after all the hard work. Plus, "all work and no play makes Jack a dull boy." Every time I do something good at work or at home that makes me all fuzzy inside with pride or when I accomplish a goal I set myself out to do, I treat myself to my favorite snack/ drink, or I make contributions to a sinking fund that will help me purchase something I want (ex. now I am contributing to my camera fund - fisheye 2 you will be mine soon, hehe)

Do you pay yourself? If yes, how do you do it? If not, why not?
Share it in the comments! Thanks!

Tips for saving on Gas

As fuel prices are soaring around the world, and for those who can't live without their car, here are some useful tips I picked up from bankrate that I'd like to share with you on saving on Gasoline.

Car Maintenance - making sure that your car is in tip top shape will ensure your fuel consumption is optimized.

• Tire condition - wear, inflation, balance and alignment can all contribute to your fuel consumption efficiency.

• Tune up - follow your car's schedule for routine maintenance, new parts, fresh oil, right timing will contribute to fuel savings.

• Lose the weight - don't weight down your vehicle with the junk in its trunk. Remove all unnecessary stuff from your vehicle because your car will just burn more gas carrying the extra (unnecessary) weight.

Gas shopping - Knowing the when and what kind of gas to use will translate to big savings year round.

• Octane rating - what the Petron ad said is true, use the proper Octane rating of fuel needed by your car. This will make sure the fuel you loaded is compatible with your car's engine's needs.

• Don't top off the Gas - when you load a full tank, just ask the gas attendant to use the automatic stop. Filling your tank to the brim is just a waste because too much gas will just evaporate or spill out.

Driving habits - Developing good driving habits will lead you to savings with you thinking about it.

• Plan your trips - if you need to run errands, plan them well so don't have to go back and forth from one location to the other, saving gas on the miles you don't travel.

• Don't warm up too long - your car just needs a minute or 2 to warm up, any longer is just wasting fuel. Just make sure you don't accelerate too quickly, after a minute of warming up.

• Ease up on the accelerator - quick acceleration and engine revving is bad for your pocket, and so is driving too fast.

As we don't see the end of the rise in gasoline prices yet (forecast is at 90PHP to 100PHP per liter by year end), it might be a better idea to carpool or commute to get the most savings from gasoline expenses.

Once you've noted the savings from your fuel spending adjust your budget to spend less on gas and more on savings.

Any other tips to add? Share them in the comments! Thanks!

I am getting fired this friday..

Knowing that I'll get fired by Friday, a few questions crossed my mind.

• How will I pay for food, water and other household expenses?
• How will I pay my bills?
• Without my employer's medical benefits, how will I pay for any unwanted/ unexpected incidents?
• Frankly I am tired of getting into debt, so I don't want to borrow money but how will I make ends meet?
• Do I have enough funds set aside for the things above while I'm looking for another job?

Admitting to the fact that losing my job by Friday isn't an impossibility, I better start taking my emergency fund seriously, now that I still have work!

Whats my goal?
For starters, my goal would be to have at least 3months worth of my gross salary tucked away in my emergency fund.

Where am I right now?
Right now, I have a little more than a month's worth of my gross salary in my emergency fund. Hopefully, I'll be able to reach my goal before the end of 2008.

What will I do to reach my goal?

1. Put a priority in spending less than what i earn, or at least to stop spending unnecessarily.
2. Make sure i religiously put up monthly contributions into my emergency fund.
3. Flex my budget, to bump up my monthly contributions.
4. Inject windfalls or extra income into my emergency fund first, before anything else.

What will i do after I reach my goal?
Well, thats for another post, hehe!

I believe that Trent over at the simple dollar was right when he said that thinking about the possibility of losing your job soon will make us take our finances seriously. And this will be my mantra until I get my emergency fund fat enough.

Do you have an emergency fund? How near are you from reaching your emergency fund goal? Share your answers in the comments! Thanks!

Second thoughts

We should always think twice about the purchases we make.

When i used to go shopping with one of my good friends, i would always ask her to give her possible purchases a second thought, and/ or hound her with questions like, do you really need it? what are you going to use it for? are you planning to use it more than once? etc. or the other tactic i would use would be to ask my friend to think about putting off the purchase of a particular item and if she still wants that particular item after a week or two then she should go through the purchase.

Trent over at the simple dollar offers another question to think about before making a purchase, he says "you should ask yourself if you will be using the item until it truly wears out. if you're not sure or are pretty sure you won't.. do you really need that item?" Doesn't this get you thinking?

The underlying concept here is that the price of the purchase should be less than worth of the benefit derived from the item (or at least the price should be equal to the benefit). Are you prepared to shell out an X sum of money so that we can use a piece of clothing once? or are we going to spend our hard earned money on something that costs much more than the benefit we can get from it?

Think about it!

Do you guys give your purchases second thoughts before buying them? Share your answers in the comments! Thanks!